Subprime Changes the Lending Landscape

Mortgage and Lending with Heartland Home Mortgage

Subprime Changes the Lending Landscape

The effects of the subprime crisis are becoming clearer with each passing day. According to the Wall Street Journal, tightening guidelines and fewer available products are creating challenges for borrowers with credit issues. If you're thinking about taking on or refinancing a mortgage, your credit score will be crucial when it comes to obtaining the best loan program available.

For homeowners with ARMs that are scheduled to reset anytime within the next 2 to 24 months, the challenges are even greater. With higher credit standards and tightening guidelines, you may not even qualify for a refinance if you wait too long. At this stage, a fixed-rate product may be your best chance at creating real financial stability before your loan resets and your payment adjusts. Even if your mortgage has a pre-payment penalty, it may be less expensive to absorb the penalty now and refinance into a more stable mortgage.

In the event that you now owe more on your home than it's currently worth, or if you don't have enough equity to sell your home and cover expenses, help could still be available - but you have to act now. Meet with a mortgage professional right away and see what options you have.

First-Class Mail is Forever Altered

  The US Postal Service has introduced the "forever" stamp. This special stamp, good for any first-class letter weighing up to one ounce, is valid forever, no matter how much postal rates increase. That means consumers can purchase these special stamps at today's rate and use them for years to come, even if postal prices double or triple. And, while there are definitely better places to invest your money in the long term, the forever stamp offers consumers protection against rate hikes and the annoyance of having to purchase one- and two-cent stamps whenever prices do increase.

In 1968, first-class stamps were six cents. Since then, the price has risen 14 times, including the May 2007 increase to 41 cents. This past December, a new law was passed linking postal rates to the consumer price index, which could cause rates to increase annually. The forever stamp, an idea adopted in Europe years ago, features the Liberty Bell, which hasn't appeared on a US stamp in over 30 years.

Where Your Tax Dollars Go

  The US government expects to collect some $2.6 trillion in tax revenue this year! That's a 6% increase over last year, and a 13% jump since 2005. With the tax season behind us, did you ever wonder how your tax contributions are spent? Well, according to the government's 2008 budget, nearly 71% of this money is already slated for mandatory programs such as Social Security, Medicare, and interest toward the national debt. The military receives about 17% of the total budget, with another 1.3% funding homeland security. The remaining discretionary revenue not only funds highways, railroads, airports, etc., it also pays for federal agencies responsible for science, space exploration, medical research, education, environment, labor, law enforcement, etc. Finally, about 0.5% is spent on foreign aid.

Mandatory Spending



Discretionary Spending


Social Security








Homeland Security







Interest on debt










If the estimated numbers don't seem to add up, that's because the government expects to fall short of its fiscal budget by almost 8% this year, adding $200 billion or so to an almost $9 trillion national debt.

FSBOs: Don't Go It Alone

Selling your home on your own is a commendable achievement - if you can actually pull it off. But did you know that nearly 70% of For Sale By Owners end up enlisting the help of a professional? Of course, a few years ago, the real estate market was booming and obtaining a quick sale at the desired price was a much easier task. However, in today's challenging post-subprime market, buyers have more leverage and more inventory from which to choose. Beyond sheer negotiating power, a real estate agent can provide sellers with a comparative market analysis, accurate statistics which show exactly how much homes in your neighborhood are selling for. They will also have access to more serious and qualified buyers. Remember, your home is the most valuable asset you have. Having a qualified professional in your corner could make all the difference.


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